Lithium company Liontown has rejected media speculation that it received a takeover proposal from a mystery bidder, following its earlier rejection of an offer from Albemarle.
Liontown shares spiked at $2.79 per share on Tuesday while rumours swirled, before cooling to $2.72 at close.
The exact origins of the rumour are unclear, but were reported by many in the media including Australian Financial Review’s Street Talk, which speculated that Wesfarmers, SQM, and South32 and Fortescue Metals may have been logical bidders.
But Liontown told the market that it has not received any takeover proposal, including any non-binding indicative proposal.
The ASX is understandably jumpy at the prospect of a Liontown takeover. In March, Albemarle submitted a non-bonding proposal to acquire all outstanding shares of Liontown Resources – a battery metals exploration and development company – for a cool $5.2 billion.
The deal comprised $2.50 per Liontown share in cash, representing a 69 per cent premium to Liontown’s 30-day volume-weighted average price.
The Liontown board unanimously rejected this offer on the grounds that $5.2 billion offer substantially undervalued the company.
The company cited its Kathleen Valley lithium project, about which the company said there are few other lithium assets of comparable “scale, quality and mine life”. The company forecasts the Kathleen Valley project to become Australia’s biggest lithium mine.
The Kathleen Valley project in WA is Liontown’s flagship lithium asset. The company projects a three million tonnes per annum throughput rate when production starts in mid-2024.
The board observed that the Albemarle proposal did not reflect the value of this asset.
At the time, Liontown’s shares jumped from $1.54 per share to $2.57. Share price has since been steady around the $2.70 margin for over a month.
Since the rejection, Albemarle has been snapping up a stake in Liontown through on-market purchases and holds just below five per cent in the company.